Dollar in deeper hole on U.S. jobs data

Euro hits another record high against greenback

KateGibson

OsamuTsukimori

CHICAGO (CBS.MW) -- The euro sailed to a record high against the dollar Friday, with the greenback knocked down again as November U.S. jobs data came in well short of expectations.

"The jobs number is still halfway decent, it was just not as good as expected, and boom, we had a reason to sell dollars. It gave the market an excuse," said Bill Hoerter, a trading manager at Alaron in Chicago.

The greenback declined to a record low against the euro, plummeting to $1.3459 in afternoon U.S. trade before making a mild recovery to $1.3454 late in the day. The European common currency hit what at the time was a record high of $1.3383 on Thursday.

The dollar was off nearly 1.1 percent against the Japanese currency, at 102.07 in late U.S. trade. The dollar dropped as low as 101.81 yen earlier in the week.

"I guess when you have a day like today all around the world people are rethinking whether they are bearish enough on the dollar," said Sean Callow, a currency strategist at IDEA Global in New York.

A report in the German newspaper Boersen-Zeitung indicated the United States would only intervene when the euro climbed above the $1.45 level. That sparked further selling of the U.S. currency, market participants said.

"It was a green light to keep selling," said Callow. "I don't think too many people thought the United States was close (to intervening) anyway."

The government estimated U.S. nonfarm payrolls increased by 112,000 in November -- far below forecasts that called for a count of around 204,000 -- while the unemployment rate dipped to 5.4 percent.

"This is the weakest pace of job growth in four months," said Kathy Lien, chief strategist at Forex Capital Markets. "The release was weaker than even the lowest forecasts by economists, and especially surprising given last month's strong number."

Economists were looking for stronger growth of about 204,000 in November, according to a survey conducted by CBS MarketWatch. None of the 42 economists surveyed forecast a figure as low as 112,000.

Payroll gains in September and October were revised downward by a total of 54,000. October's gains were revised to 303,000 from 337,000. Over the past three months, job growth has averaged 178,000 per month.

Employment is up 2.3 million since the nadir in August 2003.

Further details of the business establishment survey were weak. See full story.

The dollar, which hit a nearly five-year trough of 101.85 yen on Thursday, was recently trading at 102.44 yen. It was at 103.19 yen late Thursday in the United States.

Ahead of the U.S. report, the dollar advanced against the yen on expectations of a stronger number.

"Amid talk of possibly strong jobs data, investors took some profits on their short dollar positions," said Masatoshi Nishi, chief manager of the treasury and securities division at Saitama Resona Bank in Tokyo.

European Central Bank President Jean-Claude Trichet didn't comment on the possibility of foreign-exchange intervention at a news conference after Thursday's ECB meeting.

On Friday, Japan's Finance Minister Sadakazu Tanigaki said Tokyo will closely watch the currency movements and take action if needed.

The British pound climbed to $1.9327, compared with $1.9292 in late trading in the United States on Thursday. It fetched a 12-year high of $1.9438 on Thursday.

Capital spending by Japanese companies grew 14.4 percent in the July-September quarter from a year earlier, higher than a 10.7 percent rise in the previous quarter, the Finance Ministry said.

"The bottom line is that the corporate sector recovery was alive and well in the third quarter despite the implied margin squeeze from soaring input prices during the period," J.P. Morgan economist Ryo Hino said in a research note.

Hino added that the higher-than-expected data could prompt an upward change in the capital spending component of Japan's third-quarter gross domestic product. The revised data will be released Wednesday.

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